Volkswagen to build $2.2bn new EV plant in Germany

Construction of the facility, which will make a new model code-named Trinity, will start in 2023

Technicians work in the assembly line of Volkswagen's electric ID. 3 car in Dresden, Germany. Reuters

Volkswagen is moving ahead with a plan to add an electric car factory in Germany to keep pace with Tesla, whose plant near Berlin is set to ramp up in the coming weeks.

VW’s new plant, set to cost around €2 billion euros ($2.2bn), will be built close to its sprawling facility in Wolfsburg, the company said Friday, on the heels of Tesla receiving final approval.

Construction of the plant, which will make a new model code-named Trinity, will start in 2023. Vehicles are due to roll off the production line in 2026.

VW is “strengthening and sustaining the competitiveness of the main plant and giving the workforce a robust long-term perspective”, VW brand chief Ralf Brandstaetter said in a statement, following a supervisory board meeting.

The decision to add a brand-new facility is part of chief executive Herbert Diess’s push to pick up the pace in the EV shift and become more efficient.

Building the factory close to Wolfsburg is also a nod to VW’s powerful unions, who have frequently clashed with Mr Diess.

Tensions came to a head late last year after he floated plans to cut jobs, which led to a compromise to add the plant and a pledge to spend €800 million on a tech campus.

The new factory is targeting a production time of 10 hours per vehicle — far quicker than it currently takes to put together a car at other VW sites.

To gain momentum and fund the transition to battery-powered and self-driving models, VW last month made its boldest strategic move yet when it outlined a listing of Porsche, its most profitable asset.

The potential initial public offering could value the iconic sports car brand at as much as €85bn, according to Bloomberg Intelligence.